What do these two ASX 10-baggers have in common?

Just over a year ago, I wrote a wire highlighting two of my favourite turnaround stories for 2023-24: Bravura Solutions (ASX: BVS) and Spartan Resources (ASX: SPR).

Both companies endured brutal declines, marked by earnings downgrades, hefty impairments and desperate capital raisings. Yet, from their lowest points, they staged extraordinary recoveries, with Bravura rallying up to 870% from its March 2023 low to its February 2025 peak (nearing a ten-bagger if you include its recent dividends) while Spartan has seen its valuation balloon twenty-fold since March 2023.

These stories might sound like “catching a falling knife” – but around the lowest point, both companies presented relatively lower-risk and highly-leveraged opportunities. This viewpoint is not based on opinion, but on their balance sheets and enterprise values.

In this wire, I’ll unpack why these beaten-down stocks were undervalued and how they transformed into some of the market's best growth stories.

Bravura Solutions: From rock bottom

Bravura Solutions is a provider of software and services for wealth management, life insurance and the funds administration sector. After listing in 2016 at $1.45 per share and peaking at $5.00 in May 2019, a string of setbacks battered the stock – notable catalysts include:

• March 2020: Non-Executive Director Peter Mann sold $168,000 in shares, followed by a 50% tumble over the following weeks.
• June 2020–March 2022: Two major shareholders dumped 7% and 6% stakes.
• February 2023: Bravura delayed its results to to consider its performance, guidance and a potential capital raising
• March 2023: A $80 million capital raise was announced at 40 cents per share — a 53% discount — issuing 200 million new shares, or 81% of existing capital
• June 2023: The CEO departed after less than a year.

The March 2023 raise was at a massive discount and highly dilutive. They only managed to raise $56 million but reassured investors there was a “clear strategic plan that targets a return to profitability, underpinned by clearly defined business outcomes and financial targets."

The capital raise was also announced in parallel with its first-half FY23 results:

• Revenue down 11% to $118 million
• EBITDA loss of -$7.0 million (down from $25.3 million in 1H22)
• Adjusted net profit loss of -$14.2 million (down from $16.1 million profit in 1H22)
• Non-cash impairment of $176 million including $163 million of Goodwill and $13 of work-in-progress development.

When trading resumed, the stock plummeted 43% to 39 cents, then slid further to a low of 29 cents – leaving it with a market cap of $120 million and $85 million in cash or an enterprise value (EV) of just $35 million.

In simple terms, Bravura was trading at a steep discount to its cash reserves, meaning the market valued its operations at almost nothing. A low EV is attractive because it signals that a company’s core business is undervalued relative to its cash holdings, offering significant upside potential if the company can execute its turnaround. 

After the sell-off, the stock stabilised around 45–50 cents (~$200 million market cap) for five months, signalling the end of panic selling. By August 2023, Bravura’s FY23 results showed progress:

• Cash balance of $75.7 million, meeting guidance
• Revenue down 6.4% to $249.6 million, with an adjusted net loss of $23.1 million
• A new CEO, refreshed board, and accelerated change program set to deliver $40 million in annual savings by June 2024
• Guidance for a positive cash EBITDA run rate by FY24’s end.

The stock surged 44% to $0.72 post-results and held steady for another three months.

At its November 2023 AGM, Bravura upgraded its FY24 guidance:

• Revenue stable with FY23
• EBITDA of $10–15 million (up from a $0.3 million loss)
• Annual savings increased to $47 million, with capex and lease costs cut to $16 million (from $28 million).

The list goes on:

• Shares rallied 29.6% on 20-Feb-24 after 1H24 results showed 7.3% revenue growth to $127m and a net loss of $1.6m (1H23: -$190m loss)
• Shares rallied 20.8% on 4-Dec-24 after the company upgraded its FY25 cash EBITDA guidance to $33-36m (previously $28-32m) and signalled its intention to recommence dividends
• Shares rallied 18.6% on 12-Feb-25 after solid 1H25 results and guidance upgrade.

Spartan Resources: A golden redemption

Spartan Resources, formerly Gascoyne Resources, is another turnaround triumph, with one of the most spectacular gold discoveries arguably since De Grey’s Hemi in 2021-22. But much like Bravura, its journey also included a near-death experience.

Prior to 2023, Spartan was a failed gold producer that faced significant challenges in bringing its flagship Dalgaranga Gold Project in WA into profitable production. This was driven by:

• Poor grades: Inaccurate geological models revealed a higher-tonnage, lower-grade deposit, slashing cash flow forecasts
• High costs: Operating costs of more than US$2,500/oz, leading to significant losses
• Management turmoil: In 2018, CEO Mike Dunbar and Chairman Ian Murray abruptly resigned, the latter after just three weeks in the role
• Operational woes: Rising costs, labor shortages, COVID disruptions, and weather events culminated in a $40–50 million impairment in August 2022.

From a $7.50 peak in May 2018, Spartan’s stock collapsed almost 98% to 16.5 cents by November 2022.

 A five-month trading halt followed as the company sought funding. In 2023, Spartan raised $26.3 million at 10 cents per share — a 40% discount to its last traded price — with additional backing from private equity and a major shareholder, boosting its cash to $50 million.

Post-raise, Spartan pivoted, placing Dalgaranga into care and maintenance and focusing on the high-grade Never Never discovery nearby. When trading resumed, the stock fell 37.5% to 10.5 cents, reflecting a market cap of $80 million or an enterprise value of just $30 million.

Like Bravura, it traded sideways for two months before catching fire.

Exploration and drilling efforts at Never Never seemed to return high-grade gold hits almost every week, with every announcement driving the share price higher. Here's a snapshot of key announcements between May-Dec 2023.

• 2 May 2023: Exceptional High-Grade Results from Drilling at Never Never
• 16 May 2023: More High-Grade Assays Highlight Never Never Potential
• 7 July 2023: Significant Assays Results Outside Never Never MRE
• 24 July 2023: Never Never Resource Increases to Over 720koz
• 17 October 2023: New Gold Discovery north of Never Never
• 14 November 2023: Spectacular new high-grade gold intercepts up to 1,093g/t
• 14 December 2023: Never Never hits 952,900oz @ 5.74g/t

The company is now set to merge with Ramelious Resources (ASX: RMS).

The bottom line

Turnaround plays like Bravura and Spartan are rare and require a unique setup: a steep share price decline, a deeply discounted capital raise to bolster cash reserves, and a credible path to recovery.

At their lows, both companies traded at extremely low enterprise values and a high cash buffer offered a margin of safety of investors.

As Livewire's Growth Series kicks on, let this wire serve as a reminder to not only look at growth, but also company balance sheets.